An energy company created by the Navajo Nation agreed Thursday to purchase a coal mine in northwestern New Mexico.
The tribe has an abundance of coal, but the $85 million deal with Australian-based BHP Billiton Ltd. that is expected to close Dec. 1 marks the Navajo Nation’s first venture in the coal mining business.
The tribe formed Navajo Transitional Energy Co. LLC earlier this year to look into buying the Navajo Mine near Farmington, which produces up to 8.5 million tons of coal annually. It is the sole provider of coal to the nearby Four Corners Power Plant, which provides electricity to about 300,000 households in New Mexico, Arizona and Texas.
The amount of coal extracted from the mine and the number of jobs likely will decrease as the plant’s operator, Arizona Public Service Co., follows through with plans to shut down three of the units and acquire ownership of two other units.
Regardless, Craig Moyer, an attorney at Manatt, Phelps & Phillips who served as the Navajo Nation’s lead counsel in the deal, said the tribe should see $100 million a year in taxes and royalties from the coal mine and power plant. The cash flow to NTEC as a result of coal sales is expected to bring in $1 billion through 2031, he said.
The Navajo Nation is paying for the coal mine with the profits the mine generates. BHP will manage it until 2016, when the Navajo Nation will have to find a new manager.
Earlier last week, leaders of the Navajo Nation’s executive and legislative branches have signed into law several pieces of legislation concerning the tribe’s energy future.
In two separate signing ceremonies Thursday in Window Rock, Navajo Nation President Ben Shelly and Navajo Nation Council Speaker Johnny Naize signed the Navajo Nation Energy Policy of 2013.
“It is guidance, a reference to commitment and bringing energy to the Navajo Nation,” Naize said during the legislative branch’s signing ceremony.
The council passed the energy policy Tuesday. Thirteen members voted in favor of the policy, and six opposed it.
During the signing ceremony, Naize mentioned that on Oct. 18 he signed a bill that gave $4.1 million from the Unreserved Undesignated Fund Balance to the Navajo Transitional Energy Co. LLC. The council approved the bill during the Oct. 16 special session, and Shelly signed the bill into law on Thursday.
The funding will cover the tribal enterprise’s operating expenses and costs associated with acquiring Navajo Mine from BHP Billiton.
The speaker explained that NTEC is continuing its oversight on the possible mine purchase.
“The negotiations are still continuing, and it’s near finalization, so this will help the NTEC office,” Naize said.
Naize stepped aside to allow council delegate Mel Begay to sign the bill to amend NTEC’s plan of operation.
Begay had to sign the amendments because he served as speaker pro tem when Naize, who sponsored the bill, presented it to the council on Wednesday.
It passed on a vote of 16 in favor and five opposed.
Begay said NTEC’s creation gives the tribe an opportunity to develop its economy, utilities and “the development of coal extraction, development and processing.”
Delegate Roscoe Smith said if the Navajo Nation buying the mine allows the tribe to determine the future of the coal resource.